Italian Banking and Financial Law, Volume IV deals with the Italian regulation of injunctive remedies and crisis management procedures, deposit guarantee schemes, administrative sanctions, alternative dispute resolution systems and tax rules.

The public interest in enhancing those key development factors consisting of savings and investments deeply influences the Italian law system on banking and financial markets in general as well as legislation on crisis prevention and management in particular. The ratio of a strengthened state intervention in this sector is aimed at reducing the probability of a systemic crisis, avoiding losses in economic welfare that follow a banking crisis, minimising taxpayer exposure and safeguarding the trust and confidence of investors and savers. Banks, as well as financial and investment intermediaries, are commonly considered not only – and not always – to be “too big”¹ (which is more true for multinational banks, less so for small domestic ones), but also – and more often – “too interconnected”, “too important” and “too complex” to fail.² Those are enterprises whose critical functions are such that their unexpected liquidation would cause severe adverse consequences for the rest of the financial system and global economy. Thus, the guiding regulatory principle of faith in the free market and its self-corrective nature, which was strong and pervasive in other systems during the last few decades,³ was therefore considered by the Italian legislator to be not sufficient alone to ensure the stability of the financial and banking system.

The Italian special discipline for bank and banking group crisis is provided for by title IV, Chapter 1 and 2 of the CLB and is basically constituted by two intervention procedures: Special Administration (SA) and Compulsory Administrative Liquidation (CAL). The first could be numbered into the so-called going concern situations,¹³ whereas the crisis of a bank is still considered as reversible, as the causes of disarray may be removed, after which the entity is evaluated to be potentially able to continue its activity. The second is typical of a “gone concern situation”¹⁴ and is aimed at leading the bank to an ordered divestiture, so that internal and external effects of the irreversible crisis are weakened and controlled. The state intervention is pervasive, since both the procedures are designed to be triggered, supervised and directed by the Bank of Italy.¹⁵ The authority also has the power to adopt a third kind of measure, such as the so-called temporary management (TM),¹⁶ for a faster resolution of temporary and/or minor distress, as well as the power to order specific actions to a bank, by serving “extraordinary injunctions”.

According to Art. 70 of CLB, the Minister of Economy and Finance, acting on a proposal from the Bank of Italy, may issue a decree dissolving the administrative and control bodies of an Italian bank where: (a) serious administrative irregularities or serious violations of laws, regulations or statutes governing its activity are found; (b) serious capital losses are expected; (c) the dissolution of the bodies has been the object of a reasoned request by the administrative bodies or by an extraordinary meeting of shareholders. The dissolved bodies are replaced by one or more commissioners (the so-called extraordinary commissioners), and a Supervisory Committee of three or five members (who nominate their president by majority vote); both the bodies are appointed and directed by the Bank of Italy with the duty to exercise the power of direction and administration of the bank (the commissioners), as well as the power of control (the Supervisory Committee), for a maximum period of one year from the issuing of the minister’s decree.²¹